DAX Analysis
Week 31 2019

Technical Analysis, DAX Outlook, Economic Calendar, Key Levels and Current Bias

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Friday 2nd August 2019

Dax has failed to find the momentum needed to run up to the median line target of the fork, and instead has crashed below the lower median line parallel to create a hagopian. Thanks Donald. European stocks opened sharply lower on Friday after United States President Donald Trump announced that he will place a 10% tariff on the remaining $300 billion of Chinese goods from September 1 and raise it to 25% if required. In other news, investors digested earnings reports from Allianz, Credit Agricole and RBS and awaited economic data for the United Kingdom and European Union due for release after the opening bell.

DAX hagopian

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Thursday 1st August 2019

This is one of the scenarios I like to watch out for. When we have a bullish fork, like this one below, and price is managing to hold the lower median line parallel, I like to see a break above previous minor highs, then a test of the lower median line, before a rally up to the median line. If we can catch the pullback, it's a great reward to risk opportunity. They certainly do not always work out, but the statistical edge is significant enough to take the risk.

DAX strategy setup

DAX Key Levels

Find out more DAX key levels from the dashboard

DAX Key Pivot Levels

European Share Start Lower

Shares on European stock markets posted losses shortly before the bell on Thursday, after United States Federal Reserve cut interest rates by 0.25 percentage points, the first cut since December 2008, citing global trade frictions, weaknesses in manufacturing and lagging inflation. Stocks on Wall Street went down sharply following the decision, with the Dow 330 points and falling below the 27,000 points mark. The Bank of England will announce its interest rate decision later today. Meanwhile, a string of European companies, including Standard Chartered, Societe Generale, Axa, BMW, Barclays and Shell, posted their earnings results before the bell.


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Wednesday 31st July 2019

The DAX Pitchfork

We have some interesting resources for trader development members around how to use action reaction and geometry tools to forecast the future direction of the market. One of those tools is the pitch fork. So take those tools and figure out how you might play this particular situation:

DAX pitchfork setup

DAX Finds Target Zone

We've spoken about this Action Center Reaction setup over the last week or so. Look back through this article and the dax analysis article from last week. This will more than likely turn into a pitch fork setup soon, although there are never guarantees using these tools.

DAX Finds Target

Interesting New Stories

Johnson: EU must scrap Irish backstop to avoid no-deal Prime Minister Boris Johnson yesterday shifted responsibility for agreeing a withdrawal deal before Britain quits the EU to the bloc itself. Johnson said it was “up to the EU” to “compromise” and scrap the Irish backstop agreement in order to avoid a no-deal Brexit - a move that the EU has ruled out several times.

Farage says Dominic Cummings ‘not a true believer’ Brexit Party leader Nigel Farage said yesterday that Boris Johnson’s newly appointed Brexit supremo is not a “true believer” in Brexit. Farage claims that Dominic Cummings never really wanted the UK to quit the EU even though he headed the Vote Leave campaign in 2016. The former UKIP chief added: “He thinks we’re all cretins and members of the lower order. He’s never liked me.”

DAX Heading for the reaction line

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Tuesday 30th July 2019

DAX Definitely Has Found Momentum

DAX Heading for the reaction line

Strategy Being Rebuilt

Another good opportunity from the strategy. In our case today, our algorithm different slightly from the sierra charts strategy, so it opened a couple of trades in slightly different positions. Some were closed early for small losses, which meant we used our bullets early and couldn't catch this example. But that is another reason why you should be using the strategy for yourself.

Sell signal DAX

DAX Challenging the Center Line

I remember talking about this center line break idea in last week's DAX analysis article. We were discussing how it uses an Action Reaction technique to find possible a shorting target. Before the idea could begin, the market needed to break below the center line, with momentum. This morning we have already seen the kind of momentum required.

DAX challenges center line | DAX Analysis DAX challenge center line 2 | DAX Analysis

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Monday 29th July 2019

The DAX Move Begins

There are rarely any guarantees in trading, just probabilities. This move has started up to the median line, assuming this move continues; the main question is whether or not we get a pullback to allow us to get long, or whether it just continues from here.

DAX Bounce Starts

Another Long Example

The background is green, which means look for longs. The candles were white and red (which is neutral) and then turned to green, which is a long entry. The stop loss goes under the supertrend dot, open a long at the beginning of the next candle and look for 4:1 reward.

DAX Strategy Long

Early DAX Signal from Strategy

This example was a long signal from the DAX trading strategy and it shows how the market bias (the background) is green meaning we look for longs. The next step is to look at the candle colours. The colours are based on our algorithm. When the price action (candles) turn to green, it's an opportunity to buy. Once you see the first green candle close, the strategy suggests us to open a long, placing the stop loss underneath the supertrend dots, look for 4:1 target.

DAX long signal from the trading strategy

DAX Key Levels

Watch for a break above Friday's high to signal a potential move back up to the ignition point of Thursday's decline.

Watch for a break below Friday's low to signal a potential move down towards the box on the chart (see lower chart). DAX Key Levels

DAX Major Trend

The DAX continues to hold up and digest the losses from the sharp decline we saw last week. If you draw an upsloper using the 12184 low (mid-July) and the low from last week, you can see a decent center line forming. I will be watching for a break below that to signal a potential move towards the box.

DAX Major Trend

Morning Briefing

Shares in Europe were mostly down in premarket trading despite the expected resumption of trade negotiations between the United States and China in Shanghai later this week. Last Friday, President Donald Trump stated that China would sign the deal with the US "almost immediately" if he is reelected in 2020. On the other hand, he vowed to fight for China's "developing nation" status within the World Trade Organization to be revoked.

The US Federal Reserve is set to cut interest rates this week for the first time since the financial crisis over a decade ago. With traders pricing in the chance of a rate cut at 80%, it would be the first reduction in the federal funds rate since 2008, and “would represent a remarkable reversal from the tightening cycle Powell pursued last year”, says the Financial Times, as he “seeks an insurance policy against a weakening global outlook and rising trade tensions”. Typically lower interest rates make borrowing cheaper for companies, which help business’ bottom lines and boost the stock markets. The current economic growth cycle is a decade old and, with looser monetary policy from the Fed, it could go on for longer.

I'm still of the opinion that the Fed's actions will just be prolonging the inevitable recession; this is another example of sugar high to an economy that doesn’t deal with underlying structural problems such as national debt and economic overheating.


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